Employers Not Required to Submit Pay Data or Follow Higher Salary Basis Threshold for Exempt Employees

Q.  What is the status of the EEOC’s requirement that we submit pay data with our annual EEO-1 Form?  Also, have there been any updates on the lawsuit blocking the DOL’s rule raising the salary basis for certain non-exempt employees?

A.  As we reported previously, the EEOC, as part of its effort to detect and remedy pay discrimination, amended its EEO-1 Form to require that employers with 100 or more employees submit detailed pay data on their workforce.  On August 29, 2017, the OMB sent a memorandum to the EEOC, staying implementation of this requirement.  Thus, at least for now, employers may limit the information provided on the EEO-1 Form to data on race, ethnicity and gender by occupational category (but not data on pay or hours worked).

There is similar relief for employers on the DOL overtime issue.  As we reported in a previous blog post, the United States District Court for the Eastern District of Texas granted a preliminary injunction last November, blocking the implementation of the Department of Labor’s amendments to the overtime provisions of the Fair Labor Standards Act.  On August 31, 2017, the Court took a further step, granting summary judgment blocking the rule.  The Court concluded that the Department of Labor exceeded its authority in enacting a rule raising the minimum salary threshold for executive, administrative and professional exemptions.  This likely is the official end to President Obama’s Final Overtime Rule, although President Trump may revisit the issue of the minimum salary threshold in the future.

For more information on these issues and their impact on employers, please see our Client Alert.

Lee Tankle

EEOC’s Wellness Program Rules in Doubt

Q.  Are the EEOC’s Wellness Program rules still valid?

A.  The ADA and the Genetic Information Nondiscrimination Act both permit an employer to seek medical information as part of a wellness program if the employee participates voluntarily.  However, neither statute defines the term “voluntary.”

Effective January 2017, the EEOC issued rules allowing incentives of up to 30 percent of the cost of  coverage for employees participating in a health-contingent wellness program, in which the participant receives an award for satisfying a health-related factor.  These rules aligned the EEOC’s position with the regulations under the  Health Insurance Portability and Accountability Act (HIPAA), such that employers were able to rely on the 30 percent incentive limit to comply with HIPAA, the ADA and GINA.

In October 2016, AARP filed a lawsuit against the EEOC, arguing that the EEOC’s 30 percent incentive rendered wellness programs involuntary because employees would feel coerced to participate in wellness programs and to disclose medical information to avoid losing the benefit of the incentive.  The court concluded that the EEOC did not offer a reasoned explanation for its decision to construe the term “voluntary” to permit employers to offer incentives of up to 30 percent for participation in wellness programs.

For more information about this important case, please click here.

 

Philadelphia Employers May Not Ask Wage History Questions Under New Ordinance

Q.  My company is based in Philadelphia.  We often set salaries for new employees based on the applicant’s wage history.  Are we still permitted to do this?

A.  Effective May 23, 2017, a new Philadelphia Ordinance makes it unlawful for employers in Philadelphia to inquire about a prospective employee’s wage history or require disclosure of wage history as a condition of employment.  The law was passed to encourage employers to base salary offers on the job responsibilities of the position sought, rather than on the applicant’s prior wages.  Employers will no longer be able to rely on the wage history of a prospective employee when determining the wages of that individual, unless the individual knowingly and willingly disclosed his or her wage history to the employer.

To ensure compliance with the Ordinance, employers who do business in Philadelphia should start thinking about revising their employment applications to delete any questions inquiring about an applicant’s wage history.  Recruiters, HR personnel and managers will need to be trained about the new law so that these individuals know not to ask wage-based questions during the interview process.  In addition, employers should consider revising their EEO policies to add wage history to the list of protected categories.

-Tracey E. Diamond

 

 

 

 

EEOC Issues Guidance Interpreting National Origin Discrimination

Q:  What does it mean to discriminate against someone based on their national origin?

A:  Title VII prohibits employers from acting in a way that would have the purpose or effect or discriminating against an employee because of his or her national origin.

But what does the term “discrimination based on national origin” really mean?

The Equal Employment Opportunity Commission (“EEOC”) recently issued an Enforcement Guidance on this subject. Although the EEOC’s position at times is broader than controlling case law, the Enforcement Guidance is helpful because it offers insight into how the EEOC will investigate claims of alleged national origin discrimination in the future.  It is significant that 11 percent of EEOC Charges filed in 2015 contained an allegation of national origin discrimination.

According to the EEOC, national origin discrimination means discrimination because an individual (or his or her ancestors) is from a certain place or has the physical, cultural, or linguistic characteristics of a particular ethnic group. National origin discrimination often overlaps with race, color, or religious discrimination because a national origin group may be associated with (or, according to the EEOC, perceived to be associated with) a particular religion or race.

Title VII prohibits an employer from using certain recruitment practices, such as sending job postings only to ethnically or racially homogenous areas or audiences, or requesting that an employment agency refer only applicants of a particular national origin group. Importantly, employers may not rely on the discriminatory preferences of coworkers or customers as the basis for an adverse employment action in violation of Title VII.  Thus, for example, a retail store may not reject an applicant for not fitting its “all American image.”

Social Security Numbers

The EEOC also addressed an issue that sometimes trips up employers. According to the EEOC, having a policy or practice of screening out candidates who lack a Social Security number implicates Title VII if it disproportionately screens out work-authorized individuals of a certain national origin, such as newly arrived immigrants or new lawful permanent residents, and thus has a disparate impact based on national origin. The EEOC has clarified that newly-hired employees should be allowed to work if they can show that they have applied for but not yet received a Social Security number.

Accents

Under Title VII, an employer may refuse to hire (or fire) an individual if his or her accent interferes materially with job performance. To meet this standard, however, an employer must be able to provide evidence showing that: (1) effective English communication is required to perform job duties; and (2) the individual’s accent materially interferes with his or her ability to communicate in spoken English. Likewise, an English fluency or English proficiency requirement is permissible only if required for the effective performance of the position for which it is imposed.

According to the EEOC, the key is to distinguish a merely discernible accent from one that actually interferes with the spoken communication skills necessary for the job. Evidence of an accent materially interfering with job duties may include documented workplace mistakes attributable to difficulty understanding the individual, assessments from several credible sources who are familiar with the individual and the job, or specific substandard job performance that is linked to failures in spoken communication.

Hostile Work Environment Claims

The EEOC’s Enforcement Guidance also issued an important reminder to employers that harassment based on an employee’s national origin could give rise to liability for a hostile work environment. A hostile work environment based on national origin can take different forms, including ethnic slurs, ridicule, intimidation, workplace graffiti, physical violence, or other offensive conduct directed toward an individual because of his birthplace, ethnicity, culture, language, dress, or foreign accent.  None of this behavior should be tolerated in the workplace.

Promising Practices

The EEOC lists several “promising practices” for employers to consider to avoid liability for national origin discrimination:

  • Use a variety of recruitment methods to attract as diverse a pool of job seekers as possible;
  • Identify your Company as an equal opportunity employer;
  • Implement clearly-defined criteria for evaluating performance;
  • Distribute a policy prohibiting harassment based on national origin and train employees regarding their rights and obligations under the policy.

Tracey E. Diamond

Aggregating Pay Data in the New Year: Time to Get Your House in Order

Q.  I work for a company that employees more than 100 employees.  I heard somewhere that we now have to include pay data and hours worked on our EEO-1 forms.  Is that true?

A. Yes!  Beginning with calendar year 2017, employers with 100 or more employees will be required to submit pay data and hours worked in the newly revised EEO-1 report. Adding pay data to the form means that the EEOC and the OFCCP will now have a snapshot of employers’ pay practices across protected categories of sex, race and ethnicity.

The 2017 EEO-1 report will not need to be filed until March 2018.  However, it is important that employers prepare now so that their pay data for calendar year 2017 is compliant.

Click here for a Pepper Client Alert discussing this issue in more detail.

-Tracey E. Diamond